Attorneys for Texas financier R. Allen Stanford, who is accused by the Securities and Exchange Commission of running a "massive Ponzi scheme," say the agency has "railroaded" their client and now is trying to prevent him from defending himself.
Stanford has been seeking to free up $10 million in assets to pay for his defense, but the SEC and a court-appointed receiver have opposed that request, saying Stanford is trying to defend himself with proceeds of the alleged fraud. Stanford argues there was no fraud, and the SEC is merely trying to cover up for its mis-steps in the Madoff case.
"Having railroaded Allen Stanford this far with no evidence and even less opposition, the SEC now seeks to ensure that Stanford has no representation going forward so it can finish the job," writes attorney Jacks Nickens in a brief filed over the weekend in federal court.
The filing does not indicate how Nickens and Stanford's other attorneys are being paid, but says the SEC's asset freeze reduces Stanford "to seeking assistance from his friends and family, while the SEC vilifies him to the world — all without a trial." The filing notes that the freeze even denies Stanford access to his own clothes and shoes.
The filing claims Stanford's business was in no worse condition than the entire U.S. banking industry, which received a massive government bailout, yet "that same government denies Allen Stanford access to his shoes."
The SEC sued Stanford and several of his companies on February 17, alleging widespread fraud in the sale of high-yielding certificates of deposit totaling $8 billion. That same day, the agency obtained a total freeze on his assets and records after a judge issued a preliminary finding of fraud.
But Stanford's attorneys argue he had no opportunity to defend himself at the time, and the freeze has left him unable to access the records he says will prove there was no Ponzi scheme.
The filing says the SEC allegations are based on "declarations from disgruntled former employees" as well as hearsay.
Stanford has not been charged with any criminal wrongdoing, but a Justice Department investigation is ongoing.